CBDT Releases New ITR Forms For AY 2025–26: Easier Filing For Small Taxpayers And Capital Gains Reporting
Updated: 05-05-2025 at 12:33 PM
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Income Tax Returns Form 1 and Form 4 notified by CBDT for AY 2025–26, provide simplified tax filing procedures that emphasise ease of use for employees and those operating small businesses. LTCG tracking now arrives within ITR-1 and ITR-4 to simplify tax compliance requirements, specifically for taxpayers with simple financial profiles.
Key Highlights Of ITR Forms For AY 2025–26
The Income Tax Department has released new ITR forms for the Assessment Year 2025–26 with important changes for taxpayers. These updates aim to simplify reporting and improve compliance for individuals and businesses.
| Feature | Details |
|---|---|
| Forms Notified | ITR-1 (Sahaj) and ITR-4 (Sugam) |
| Applicable Assessment Year | 2025–26 |
| Filing Deadline | July 31, 2025, for individuals not requiring an audit. |
| Additional Requirements | Disclosure of tax regime selection, Form 10-IEA acknowledgement for opting out of the new tax regime, detailed deduction reporting through drop-down menus, and enhanced tracking for foreign retirement accounts under Section 89A. |
Also Read: Exploring The Benefits Of India's New Tax Regime For FY 2025-26
Detailed Overview Of Changes
The Income Tax Return (ITR) forms for AY 2025–26 come with several key updates affecting salaried individuals, pensioners, and businesses. These changes aim to simplify the filing process and align it with current tax laws and reporting requirements.
1. Inclusion of LTCG In ITR-1 And ITR-4
To comply with filing requirements, previous regulations specified the usage of ITR-2 or ITR-3 for all capital gain taxpayers regardless of their respective exempted amount. The new forms allow:
-
ITR-1: The reporting of LTCG from Section 112A to ITR-1 becomes possible when total gains do not exceed ₹1.25 lakh, while no capital losses exist for carryforward.
-
ITR-4: Similar inclusion for taxpayers under the presumptive taxation scheme.
The reform brings convenience to small investors and salaried individuals by simplifying their documentation requirements when they have small capital gains.
2. Mandatory Disclosure Of Tax Regime Selection
As a new requirement, all taxpayers must specify their selection between continuing with the previous tax framework or adopting the new system. Users selecting a tax regime change for AY 2025–26 need to submit the Form 10-IEA acknowledgement number. Late submissions require justification.
3. Enhanced Dedication Reporting
Users must select specific deduction clauses and amounts under Sections 80C to 80U using a drop-down menu. The method provides accurate reporting together with minimised errors.
4. Improved Tracking For Foreign Retirement Accounts
Section 89A income from foreign retirement funds now receives advanced tax relief tracking, which helps both non-resident Indians and individuals with retirement accounts abroad.
Also Read: Understanding Foreign Tax Credit & Form 67
What Is The Eligibility Criteria For ITR-1 and ITR-4?
The Income Tax Department has set specific eligibility rules for filing ITR-1 and ITR-4 forms. Taxpayers must meet these conditions to ensure accurate and compliant return filing.
| Form | Eligible Taxpayers | Ineligible Taxpayers |
|---|---|---|
| ITR-1 | Resident individuals with income up to ₹50 lakh, including salary, one house property, other sources (interest), agricultural income up to ₹5,000, and LTCG under Section 112A up to ₹1.25 lakh. | Individuals who are directors in a company, have invested in unlisted equity shares, have deferred tax on ESOPs, have assets outside India, or have income exceeding the specified limits. |
| ITR-4 | Resident individuals, HUFs, and firms (excluding LLPs) with income up to ₹50 lakh, income from business and profession under sections 44AD, 44ADA, or 44AE, and LTCG under Section 112A up to ₹1.25 lakh. | Individuals who are directors in a company, have invested in unlisted equity shares, have deferred tax on ESOPs, have agricultural income exceeding ₹5,000, have assets outside India, or have income exceeding the specified limits. |
Conclusion
Devaux's notification of ITR Forms 1 and 4 for AY 2025–26 creates a significant improvement in making tax filing simpler for small taxpayers. The department implemented a policy to include LTCG under Section 112A inside these forms to lighten the compliance requirements for people who have uncomplicated financial structures. Taxpayers must examine the updated forms and submit them precisely before the July 31, 2025, due date.
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